February 2006 Market Clearing in the Energy Industry 72 © Copyright 2006, CCRO. All rights reserved. NCC/ North American Energy Credit and Clearing Corp (“NECC”) New York Mercantile Exchange (“NYMEX”) ICE/LCH Clearnet Virtual Markets Assurance Corporation (“VMAC”) Natural Gas Exchange capped at VaR based on a 2- day holding period and 95% confidence interval. Disposition of Non Defaulting Matched Swap. First, Re-pair with another Participant and retain Swap. Second, Terminate and exercise Swaption for new Price Correlated Swap Lastly, Terminate Swap and payout Default Termination amount. Readiness NCC successfully processed its first physically cleared next day power contract in June 2005 on ICE. Since then its efforts have been focused on building the critical mass necessary to launch OTC gas and power contracts in extended locations and of varying tenors. For RTO/ISO markets NCC’s solution is available and offers options mirroring the status NYMEX already successfully clears products through its Clearport platform, as well as its exchange- traded contracts. Participants who have already had an account with an FCM will be impacted by spot market clearing. Participants without an FCM account would need to establish one. Modifications would be required to back- office processes for shadow settlements, and ISO/RTO settlement systems would require modification. ICE/LCH Clearnet introduced the first cleared OTC energy products in 2002. All cleared trades are cleared by LCH Clearnet members, all of whom are also FCM’s. All major US FCM’s are members of LCH and VMAC indicates that its solution is fully operational and has been tested by a number of its participants. Incorporated in 1993, Natural Gas Exchange Inc. (“NGX”) owns and operates an electronic exchange and clearing facility for natural gas physical and financial forward contracts, and for electric power financial contracts. To date there are 120 participating firms in the NGX comprising a